October 31, 2003
LEGISLATIVE HISTORY OF SOCIAL SECURITY OFFSET FOR TOTAL DISABILITY WORKERS' COMPENSATION
By: John Moran, Associate Analyst
You asked for the legislative history of the workers' compensation total disability offset for people receiving Social Security retirement benefits and arguments for and against the offset.
PA 93-228, the act that created the Social Security offset for workers' compensation total disability benefits, was an omnibus workers' compensation reform package primarily intended to reduce the cost of workers' compensation for employers. The offset was part of a major amendment, which included a number of changes to workers' compensation law, added to the bill on the house floor.
The offset means workers' compensation (WC) total disability benefits are reduced by the amount of Social Security retirement benefits a claimant receives. If the claimant's Social Security benefits are greater than the amount the person would receive under WC, then the claimant receives no compensation benefits.
PA 93-228 (HB 7172) made a number of changes to the WC system and most of the major changes were intended to reduce the system's overall costs. On May 20, Rep. Lawlor introduced the amendment (LCO 6537) that added the offset language to the bill. He described the amendment as a response to the “outcry, especially in Connecticut's business community, to dramatically bring down the cost of workers' compensation insurance.”
The offset language was only part of the extensive amendment. Lawlor, then Labor and Public Employees Committee chairman, did not specifically mention the Social Security offset in his remarks, but he said the amendment did not include any total disability offsets for federal WC or public or private pension benefits. Only one legislator briefly mentioned the Social Security offset as part of a list of reasons he would vote against the amendment. The House approved the amendment by a 111 to 39 vote.
In the Senate, Senator Meotti remarked that the offset was necessary because it would help Connecticut be competitive with other states that have similar offsets. The Senate approved the bill, as amended by the House, 32 to 4 on June 3. Governor Weicker signed it the next day. The offset is codified at CGS § 31-307(e).
Since then bills to repeal the offset have been introduced numerous times, including in each of the last three sessions, and they have each failed to come up for a vote in either house. Last session, Senate Bill 46, a bill to repeal the Social Security offset for both unemployment insurance and WC, was favorably reported out of the Labor Committee and later failed on a motion to get a favorable vote in the Appropriations Committee.
ARGUMENTS FOR AND AGAINST THE OFFSET
The business community has generally supported the offset saying repeal would be (1) costly for the WC system and the employers who support it and (2) a disincentive to going back to work for injured workers collecting both types of benefits. These groups have often argued that without the offset claimants would get a “double benefit” of WC and Social Security that would serve to discourage them from returning to work. This argument sees people getting Social Security retirement benefits more as retirees than as active members of the workforce.
Some have also argued that eliminating the offset may make some employers less likely to hire Social Security recipients, because they may be viewed as increased compensation risks due to their age. This effect could actually make it harder for Social Security recipients to find work.
Offset opponents, primarily labor and senior citizen groups, argue that many of those collecting Social Security retirement benefits cannot afford to live on those benefits alone and have to work, so they should receive the regular WC benefits when they are injured on the job. They argue that federal rules have changed to allow people on Social Security to work more because it is widely acknowledged that Social Security alone is not sufficient to live on. Under this view eliminating the offset is recognizing the changing needs of an aging population. They also say the offset is a windfall for insurance companies that provide WC insurance to employers because the greater the number of Social Security claimants on an employer's staff, the lower the WC liability.